As the saying goes, "To make money, you have to spend money." While spending money is an inevitable part of running a successful business, keeping track of all your expenses without a proper process can be difficult.
While some companies choose to track their expenses manually, there is a quicker and safer approach: using an expense report tracking system.
What Are Expense Reports and What Do They Do?
Expense reports are special forms that outline and track business-related purchases and are submitted by employees for tracking and reimbursement purposes. While they may be tedious to complete, these reports help streamline budgets, confirm purchases, ensure compliance through documentation, and track tax deductions.
Common expense report categories include the following:
- Travel
- Parking
- Hotels and other lodgings
- Gas
- Office expenses such as rent, utilities, office supplies, etc.
- Repairs and maintenance
The most common expense on a report is when an employee uses their own money to buy something on behalf of the business. The employee provides details on the purchase, attaches proof of payment such as an invoice or a receipt, and submits it to their employer, who then decides whether to approve or deny reimbursement.
What's Included in an Expense Report?
While there isn't one expense report format, there are common fields and information needed to submit a report. These fields include:
- Name of the employee who made the purchase
- The date of the purchase
- How the purchase was paid for (i.e., credit card, cash, etc.)
- Type of expense (Travel, parking, etc.)
- Description of the purchase
- Proof of payment
- Reimbursement total
- Any additional notes or information regarding the purchase
- Signature or approval from a supervisor
Top Benefits of an Expense Report Tracking System
Manually reviewing a long list of business expenses can be daunting, but an expense tracking system can simplify the entire process and offer several other benefits.
Enhanced compliance
An expense reporting system enables businesses to categorize expenses and produce documentation for tax returns, ensuring compliance with federal, state, and local tax laws. In the event that there is miscommunication among a team or a miscalculation, having an expense reporting system allows you to quickly review the expense in question and go over any details, making it easier to correct any mistakes made during the reimbursement process. Fixing potential expense mistakes before it's too late can help reduce the potential for a non-compliance fine or monetary penalty.
Budget management
Expense reporting software plays a crucial role in effective budget management. It allows businesses to track and categorize expenses accurately, ensuring that cost amounts are correct and accounted for. By automating the expense reporting process, the software reduces the risk of errors and fraud while streamlining expense approval and reimbursement. This software enables businesses to make informed financial decisions and identify areas to improve and maintain compliance.
Saves time
As a business owner, your time is valuable. By automating expense reporting, you remove the need for manual processing. This not only increases efficiency but also saves you time, allowing you to concentrate on higher-value tasks, such as strategic planning and business development. Reporting software can also flag various issues and fix them in real time, reducing potential delays with reimbursement.
Simplify Administrative Tasks with GMS
Managing expense reporting alongside other responsibilities can make it challenging for business owners to concentrate on growth. That's where a professional employer organization (PEO) like Group Management Services (GMS) can be a beneficial ally.
GMS' knowledgeable experts can assist business owners with administrative functions like human resources, benefits administration, payroll, and more. GMS provides insight, assistance, and resources to help business owners effectively manage their business and employees. Our human resources information system (HRIS) allows business owners to easily manage everything from payroll to paid time off (PTO) requests to expense reporting.
Contact GMS to learn how we can help save you time and money with our services.